Taking responsibility for stewardship

Materiality topics

> Stewardship

> ESG integration

> Client outcomes (solutions)

Stewardship of our clients’ assets is at the heart of what we do. The impact of sustainability themes for investors has never been so great and, we believe, focusing on this area not only makes us better investors, but also has a positive impact on a wide set of stakeholders. ESG factors are therefore integrated into all stages of our investment process. A key part of this is being active owners of companies on behalf of our clients. By doing this, we believe we are able to offer better outcomes for our clients.

2017/18 Highlights

Retained our top rating (A+) from the Principles for Responsible Investment (PRI)
Stewardship 2
Prepared bespoke carbon assessments of portfolios, in line with client needs
Stewardship 3
Improved client experience


ESG is fully embedded into our investment process. It is implemented directly by the portfolio managers, with oversight from our Head of Stewardship and ESG, who is an industry-leading expert. We are active ‘owners’ on behalf of our clients and, by sharing best practice, encourage greater transparency and improvements at investee companies.

More detailed information on our stewardship activities can be found in our most recent Stewardship report which covers the period January to December 2017.

Martin Currie is a signatory, member, or follows the principles of a number of organisations and initiatives:

Industry body Start date
Principles for Responsible Investment (PRI) 2009
UK Stewardship Code 2015
Japanese Stewardship Code 2015
CDP 2016
International Corporate Governance Network (ICGN) 2016
OECD Principles of Corporate Governance N/A
Global Investor Statement on Climate Change 2014
Stewardship 2018 Video Play Play Video
Video: An overview of our 2018 Stewardship activities

Top rated for responsible investing

For the second year running, the PRI has awarded Martin Currie an A+ rating for each of its three top-level categories - Strategy & Governance, Incorporation, and Active Ownership1 - recognising our firm-wide commitment to stewardship and our differentiated approach to ESG. Additionally, across all sub categories, Martin Currie is in the top quartile of the investment manager peer group. Notably we are in the top 9% for Integration in Active Equity as we aim to truly embed ESG into our investment process.

Calendar year.

A plus - Strategy and Governance

We believe in strong internal policies, goals and transparency around our ESG activities; and in promoting best practice with peers, clients and policymakers. Living the values through the responsible management of our business is a critical aspect of this.

A plus - Incorporation

ESG analysis is fully embedded in our investment process, forming an integral part of the assessment of risks and opportunities, alongside traditional financial considerations. This is implemented directly by the portfolio managers, with oversight from our Head of Stewardship and ESG – an industry-leading expert.

A plus - Active Ownership

As stewards of our clients’ capital we take active ownership seriously and will engage with companies when we have identified material ESG issues. In 2017, we participated in 19 collaborative engagement initiatives and 250 private ones. In addition, in April 2017, David Sheasby, Head of Stewardship and ESG at Martin Currie, was appointed to the PRI ESG Engagement Advisory Committee. His appointment was prompted by our extensive experience of engaging with investee companies.

Raising the bar – activity in 2017/18

As part of our continuous programme of learning and development, a ‘big-four’ consultancy firm was employed to provide a gap analysis of ESG integration across the investment floor. This helped our work to further embed ESG integration into the investment process, including both investment research and portfolio risk considerations. 

This analysis was designed as a series of mock investment-consultant interviews. The overall exercise was very positive and underscored the depth of our approach but also helped identify areas we could develop further – including enhancing our training toolkit, expanding our knowledge hub (a one-stop shop for resources for the team) and sharing best practice. 

Also in 2017/18, we have been active in promoting responsible investment to a wide range of stakeholders presenting our approach to sustainability themes in investing and integration of ESG:

  • PRI/CFA education programme on ESG integration
  • ICGN annual conference – presented on ESG integration in emerging markets
  • PRI in Person conference, Berlin
  • Facilitated a session with the PRI in London on ESG integration
  • LAPFF conference – sustainability in emerging markets
  • Hosted our own client event on the importance of responsible investment in emerging markets (guest speaker Fatima Bhutto)
  • Supported and worked with other Legg Mason affiliates (and other asset managers), to build understanding of and promote responsible investment
  • Held several internal training programmes for Martin Currie investment managers
  • Supported responsible investment education for clients, prospects and consultants in a number of countries

2017/2018 CSR activity

In 20172 we took part in 250 private and 19 collaborative engagements. We voted at 685 shareholder meetings, on 7,571 resolutions.

2 Calendar year. Source: Martin Currie Stewardship report.

ESG Sustainable Financial System

Stewardship in action:

Water scarcity

Our focus is on identifying and engaging on material issues which might impact stocks held by our clients. Water scarcity is one of these and is therefore an important area for our engagement efforts, both privately and collaboratively, and we continue to support industry initiatives such as CDP (of which we are signatories). 2017 saw the successful conclusion of a two-year (first-round) PRI initiative on water risk in the agricultural supply chain which we participated in. This was a great opportunity for us to explore this material topic in greater depth, providing useful frameworks for future engagement and very good ideas around how to integrate water data into company analysis and valuations.

Over the period we:


Led the engagement with eight out of the 32 companies.

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Highlighted the strong practice of a US food retailer – water intensive production but management had excellent awareness of risks, disclosure and mitigation strategy.


Improved weak practice at a global company reliant on cotton (a water-intensive industry), by working with the firm to help understand risks and improve its disclosure – it subsequently disclosed to the CDP initiative.

Overall findings from PRI engagement initiative::


Based on the 32 companies that were benchmarked in 2017, 27 companies (84%) improved their disclosure of water risks and how they managed them in agricultural supply chains.


84% of companies reported to CDP Water in 2017, compared with 66% in 2015.


The most improved company increased its disclosure score by 44%.


Awareness and acknowledgement of water risks in agricultural supply chains increased – by 50% in the median score.


The number of companies explicitly claiming to assess water risks across their entire direct operations and supply chain (not specifically agricultural suppliers) rose from 3% to 25% between 2015 and 2017.

Read full report here

Stewardship in action – carbon disclosure

In 2017/18 we carried out work to assess the carbon footprint of the portfolios we invest on behalf of our clients. 

Climate change forms an important part of our ESG analysis and engagement. Our process identifies the material climate-change risks facing companies, assesses how these risks are mitigated and identifies potential opportunities which may arise from the transition to a lower-carbon economy. 

We are working towards understanding, measuring and disclosing carbon risks in the portfolios we manage, but are mindful of challenges to carbon footprinting, such as emissions classification, double counting and variations in measurement techniques. Using existing data, we can get a sense of a portfolio’s relative carbon ‘tilt’ versus a benchmark, although this information does not by itself influence how funds are managed. 

We do not target a specific reduction in greenhouse gas (GHG) emissions in our strategies, but we are looking to build our understanding of portfolios’ exposure to the different carbon-transition pathways. We are guided by client needs and have the capability to produce such analysis on a client-by-client basis. 

For example, we prepared analysis of our European Absolute Alpha strategy for a French client, via Legg Mason, in response to new legislation (Article 173, The Loi de Transition Energetique), which requires improved climate-change disclosure.

ESG Climate change

Stewardship in action:

Assessing carbon disclosure

When material to a business case, carbon disclosure is a key part of our engagement agenda. In Australia, we engaged with cement company Adelaide Brighton Cement, assessing its high exposure to risks stemming from more stringent carbon regulations and overall environmental management.

While the company was making some improvements in its approach to environmental issues, overall practices were weak, relative to competitors (and best practice), with a notable lack of emission reduction targets and no reporting to CDP. It therefore fared poorly in this area and this was reflected in our assessment of the company’s quality and our financial modelling. As part of our ongoing engagement we are encouraging the company to improve disclosure in this area.

We are guided by client needs and have the capability to produce such analysis on a client-by-client basis.

Putting clients at the heart of what we do

During the reporting period, we increased client choice and access to our investment strategies, by launching 10 new investment access ‘vehicles’. These included the Legg Mason Martin Currie Ethical Income Fund in Australia and a separately managed account (SMA) in the US, offering improved flexibility for investors to access our emerging markets strategy.

A total of 31% of assets under management is in bespoke mandates, meeting clients’ specific requirements.

Martin Currie’s investment solutions are specifically designed to meet our clients’ needs. Whether this is matching return objectives, risk tolerance, liability profiles or income requirements. We have distilled and refined our offering into four distinctive strategy types, each defined by their own risk framework and the outcomes they provide to our clients.

Clients and Martin Currie

Client collaboration in action – Martin Currie Australia Ethical Income

Both the Martin Currie Australia Equity Income and Ethical Income strategies were created through collaboration with our clients, based on their income needs. 

Through discussions with various not-for-profit organisations, foundations and charities, we realised the income needs of these groups of investors were not dissimilar to those of retirees (for whom the Equity Income strategy was originally created). However, these clients also required an investment portfolio which excluded companies that are at odds with their own ethical values and beliefs. 

Martin Currie Australia worked closely with the seed investors to create a screen that took their specific ethical values into consideration, and blended this with our existing Equity Income investment process to deliver an income solution that matched both their ethical requirements and income needs.